POSCO E&C raises 400B won in first perpetual bond to dodge downgrade
What's the deal? POSCO E&CDealroom has a profile for this one. Try Dealroom → has raised 400 billion won ($338 million) through its first-ever perpetual bond, a privately placed hybrid security carrying a 6.35% coupon. The Korean construction firm will use the proceeds to redeem existing corporate bonds.
Why now? The company's finances have grown precarious from a credit rating perspective. All three domestic credit agencies list a debt ratio above 150% as a downgrade trigger, and POSCO E&C's consolidated ratio hit 171.8% in the first quarter of 2026.
What's the endgame? The capital injection has already pulled the debt ratio down to 152%. Once the company redeems roughly 250 billion won of commercial paper maturing in September 2026, the ratio should fall into the 140% range — below the downgrade line. Its current rating is A+ (negative).
By the numbers: Lowering debt is only half the fight. NICE Investors Service also flags an EBIT/sales ratio below 4% as a downgrade condition; as of March 2026, POSCO E&C stood at 3.2%.
A company official said the aim is "to suppress additional increases in overall borrowings by using them to repay existing debt, and to stabilize the maturity structure."
What could go wrong? The bond includes a step-up clause. If POSCO E&C does not exercise the call option after three years, 3.2% will be added to its three-year private placement rate from July 2029, with another 0.5% from July 2030 — raising the interest burden.
The signal: The bond puts out the immediate fire, but analysts warn downgrade pressure will be hard to shake while profitability improvements stay delayed. A rating agency official noted the firm's financial burden "has been growing recently," and that a weak business environment means the outlook will be judged on profitability, not the debt ratio alone.
Read more: Yonhap Infomax
Image credit: @yakobusan Jakob Montrasio
